Tesla Model 3 woes could boost GM, others

Tesla Model 3 woes could boost GM, others
Ian Thibodeau, The Detroit News Published 12:01 a.m. ET Oct. 10, 2017

The Model 3 has run into production problems as the Silicon Valley automaker struggles to get the first ones off the line. Tesla was supposed to build 1,500 in the quarter ending in September. Tesla managed to build only 260, the company said last week, making its goal of 20,000 cars per month by December increasingly unlikelyTesla Inc.’s Model 3 production woes could be a boon for other automakers.
When customers realize they might have to wait longer than expected to take delivery of their all-electric Model 3 sports sedan, some of the half-million people who have already put $1,000 deposits on the new Tesla might instead begin to look at similar offerings, analysts said.
At the top of that list: General Motors Co.’s all-electric Chevrolet Bolt — a Michigan-built car with a similar sticker price in the mid-$30,000 range and a similar cruising range of more than 220 miles on a single charge — that’s already in showrooms.
The Model 3 has run into production problems as the Silicon Valley automaker struggles to get the first ones off the line. Tesla was supposed to build 1,500 in the quarter ending in September. Tesla managed to build only 260, the company said last week, making its goal of 20,000 cars per month by December increasingly unlikely.
“We are deep in production hell,” Musk tweeted Friday in explaining the delays.
Traditional automakers would be punished by investors for such a miss, but Tesla stock actually gained last week.
GM and Ford Motor Co. both announced in early October plans to increase the number of electric vehicles in their line-ups over the next several years. Fiat Chrysler Automobiles NV has said it will electrify more vehicles, and Nissan Motor Co., BMW AG and others have electric vehicles launching or currently in their lineups. Those companies stand to capitalize if Musk fails to deliver on his promises.
“Other analysts and investors just don’t realize how many electric vehicles are in the pipeline that Tesla is going to have to compete with,” said David Kudla, CEO and chief investment strategist of Mainstay Capital Management LLC in Grand Blanc. “These other auto manufacturers aren’t dumb. If demand is there, they’ll come with the products to challenge Tesla and meet it.”
Tesla spokespeople on Monday sought to minimize reports of significant production problems and refuted that Model 3 bodies were being hand-built.
“We are simply working through the S-curve of production that we drew out for the world to see at our launch event in July,” a Tesla spokesperson said in an emailed statement. “There’s a reason (Elon Musk called it) production hell.”
The company said that every vehicle has hand-built and machine-built portions, but the production line is running. Musk on Sunday night posted an Instagram video of what he said was the Model 3 body line working at one-tenth of its actual speed. The video showed automated arms whirring around a car frame.
“We are still in the beginning of our production ramp, but every Model 3 is being built on the Model 3 production line (in Fremont, California), which is fully installed, powered on, producing vehicles and increasing in automation every day,” a Tesla spokesperson said in an emailed statement.
“It will take time to fine-tune the line for higher volumes, but as we have also said, there are no fundamental issues with Model 3 production or its supply chain, and we are confident in addressing the manufacturing bottleneck issues in the near-term.”

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